March 21, 2018

The Global
Wind Energy Council released its annual market statistics last week in
Brussels. The 2017 market remained above 50 GW, with Europe, India and
the offshore sector
having record years. Chinese installations were down slightly—‘only’ 19.5
GW—but the rest of the world made up for most of that. Total installations in
2017 were 52,573 MW, bringing the global total to 539,581 MW.

Beyond the statistics, however, is the fact that wind power
is in a rapid transition to becoming a fully commercialized, unsubsidized
technology; successfully competing against heavily subsidized fossil and
nuclear incumbents. The transition to fully commercial market-based operation
has left policy gaps in some countries, and the global 2017 numbers reflect
that, as will installations in 2018.

Cratering prices for both onshore and offshore wind continue
to surprise. Markets in such diverse locations as Morocco, India, Mexico and
Canada range in the area of US$0.03/kwh, with a recent Mexican tender coming in
with prices below US$0.02. Meanwhile, offshore wind had its first
‘subsidy-free’ tender in Germany this year, with tenders for more than 1 GW of
new offshore capacity receiving no more than the wholesale price of
electricity.

Wind is the most competitively priced technology in many if
not most markets; and the emergence of wind/solar hybrids, more sophisticated
grid management and increasingly affordable storage begin to paint a picture
show/demonstrate what a fully commercial fossil-free power sector will look
like.

Europe was the big story this year, with record
installations both on and offshore, and records set in Germany, the UK, France,
Belgium, Ireland and Croatia. However, 2018 totals in Germany and UK will
inevitably be down, and unless the Spanish, Italian and and/or Eastern European
markets show some signs of life, it will be hard to repeat 2017’s numbers.

In Asia, China continues to lead. Although the market was
down by 3.5 GW, curtailment was also down a bit, showing that the authorities
are getting to grips with the grid problem, setting the stage for future
growth. Also, the offshore sector has now taken off, and will become an
increasingly important part of the future Chinese market.

India had a record year, installing over 4 GW, but will be
the ‘victim’ of a policy gap in 2018. Pakistan, Thailand and Vietnam all
continue to show promise, and there are stirrings in the laggard markets in
Japan, and particularly in South Korea as a result of policies being enacted by
the new government.

The U.S. had another strong year with 7.1 GW, and a very
strong pipeline for the next few years. Despite the political turmoil, the U.S.
industry seems to be in a solid position, having narrowly survived a scrape
with Congress, and looks to be stable going forward through 2020, although
there is still some uncertainty about what happens after that. Canada saw a substantial dip, but new developments in Alberta will
help in the coming years, and Mexico is still poised to become a
major market.

In Latin America, Brazil chalked up more than 2 GW, despite
political and economic crises which are not yet fully resolved. Uruguay
completed its build-out and is nearing the 100% renewable energy target in the
power sector. The results of 2016 and 2017’s auctions in Argentina will start
to result in strong installation numbers in 2018 and beyond.

There was a lot of activity in Africa and the Middle East,
but the only completed projects were in South Africa, where 621 MW of new
capacity was added to the grid. Australia, the only active market in the Pacific
region, put up a modest 245 MW.

The dramatic price drops for wind technology has put a big
squeeze on profits up and down the whole supply chain, but the industry is
seeking to make good on its promise to provide the largest quantity of
carbon-free electricity at the lowest price. Smaller profit margins are a small
price to pay for leading the energy revolution.

As New Energy Finance founder Michael Liebreich puts it,
we’re well on our way past the first tipping point (where wind is cheaper than
incumbent for new-build), and we’re on the edge of the second, where new-build
wind (and soon solar) will be cheaper than operating existing incumbent
generation. We’re winning the war, although not yet fast enough to play our
part in meeting the climate targets in the Paris Agreement. But we’ve laid the
foundations, and now with decent frameworks and a little bit of policy support
(price on carbon, anyone?) we’ll get there; hopefully in time.